Judge: Barbara M. Scheper, Case: 20STCV44683, Date: 2023-05-11 Tentative Ruling
Case Number: 20STCV44683 Hearing Date: May 11, 2023 Dept: 30
Dept. 30
Calendar No. 11
Baraness Investments LLC vs. Alanic International Corporation, et. al., Case No. 20STCV44683
Tentative Ruling re: Cross-Defendants’ Motion for Summary Judgment, or in the Alternative, Summary Adjudication of Issues
Cross-Defendants Baraness Investments, LLC, and Sean Baraness (collectively, Cross-Defendants) move for summary judgment or summary adjudication against the Third Amended Cross-Complaint (TACC) of Cross-Complainant Alanic International Corporation (Alanic). Summary judgment is granted for Cross-Defendants.
The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party can show evidentiary support for a pleading or claim and if not to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Atlantic Richfield).) Code of Civil Procedure Section 437c, subdivision (c) “requires the trial judge to grant summary judgment if all the evidence submitted, and ‘all inferences reasonably deducible from the evidence’ and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)
Once the moving party has met that burden, the burden shifts to the opposing party to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)
Cross-Complainant Alanic is a wholesale manufacturer of face masks, owned and managed by brothers Tony Beig and Johnny Beig. (UMF 36; Szkopek Decl., Ex. 5, p. 19 [116].) Cross-Defendant Sean Baraness (Baraness) is allegedly the sole member and principal of Cross-Defendant Baraness Investments, LLC (Baraness Investments). (TACC ¶ 5.) The parties’ claims in this action concern Cross-Defendants’ bulk purchase of face masks from Alanic during the height of the COVID-19 pandemic.
The TACC alleges that Cross-Defendants, in April 2020, placed an order for 1.7 million masks from Alanic, via oral conversations and memorialized in writing. (TACC ¶ 9.) 1,000,000 of the masks ordered were 3-ply masks, and 700,000 KN95 masks. (TACC ¶ 10.) Alanic agreed to accept a 50% deposit from Cross-Defendants to fulfill the order, with the balance owed before delivery of the masks. (TACC ¶ 12.) Alanic alleges that Cross-Defendants have paid in full for only 400,000 KN95 masks; though Alanic made those masks available to Cross-Defendants, Cross-Defendants have refused to pick up 200,000 of them, forcing Alanic to incur storage costs. The remaining 1.3 million masks have been produced but not paid for by Cross-Defendants. (TACC ¶ 13.) Alanic alleges that Cross-Defendants breached the parties’ agreement for the mask purchases by their failure to pay. (TACC ¶ 37.) Alanic further alleges that Cross-Defendants, through Sean Baraness, fraudulently represented Cross-Defendants’ ability and intention to pay for the masks. (TACC ¶¶ 82, 94.)
The evidence shows that the alleged agreement between the parties for the sale of 1.7 million masks actually consisted of four separate orders, which took the form of invoices sent to Cross-Defendants. (UMF 15, 37.) Johnny Beig, Alanic’s Person Most Qualified, explained that Alanic would fulfill customer orders by issuing invoices, with the customer’s payment of the invoice constituting acceptance: “If he’s paying, he is in a legal contract with us . . . that’s how we have it set up at Alanic International . . . if it’s not paid, you’re not buying into anything. . . . Payment is acceptance of the legal agreement.” (Szkopek Decl., Ex. 4, pp. 49-50 [70].)
Alanic sent the first invoice to Cross-Defendants on April 7, 2020, for 300,000 KN95 masks at the price of $2.05 each. (Id., Ex. 4, p. 152 [82, 98].) The next day, April 8, 2020, Alanic sent a second invoice for 100,000 KN95. (Ibid. [99].) On April 10, Alanic sent a third invoice for 300,000 KN95 masks. (Ibid. [102].) Finally, on April 14, Alanic sent a final invoice for 1,000,000 3-ply masks at the price of $0.45 each. (Ibid. [103].)
The payment terms on the invoices provide, “50% Deposit is needed to start production of goods. Once goods are ready the balance is required before dispatch.” (Ibid. [98].) The balance due on each invoice is the amount of the deposit (i.e., 50% of the total cost of the masks ordered). Each invoice shows that the deposit balance has been paid. (Ibid.)
Baraness had planned to sell the first shipment of KN95 masks that he acquired, then use the revenue from that sale to cover the remaining balances due on his orders. (Wilson Decl., Ex. A, p. 70 [33].) But over the next month, the prices for the masks fell, and Baraness was unable to pay for the remainder of the masks. (Id. p. 75.)
KN95 masks
Johnny Beig testified that Alanic cancelled 300,000 of the 700,000 KN95 masks ordered by Cross-Defendants. (Szkopek Decl., Ex. 4, p. 254.) Tony Beig testified, “[Baraness] made a deposit on all three invoices, and we calculated and gave him what he paid…” (Szkopek Decl., Ex. 6, p. 313-14 [126].) He further explained, “[Baraness] did not have the money so we have to cancel – in good faith. Because [Baraness] begged me a lot, and in good faith I tried to help him and got him off the hook for the balance.” (Wilson Decl., Ex. B, p. 70 [33].) “It was 400[,000] because of the deposits [Baraness] paid. . . . he’s a friend for a long time so we gave him what he paid the deposit for as an initial order of 700,000.” (Wilson Decl., Ex. B, p. 327 [51].) The agreement to cancel the KN95 order was confirmed in text messages from Tony Beig to Baraness. (Szkopek Decl., Ex. 6, p. 314 [127].)
After Alanic cancelled the balance on Cross-Defendants’ order, it sold the 300,000 KN95 masks left over to another buyer. (Szkopek Decl., Ex. 6, p. 300 [124].) Tony Beig testified, “I got lucky for KN95. Somebody bought the balance. So that’s exactly why we let him off the hook, because he was a friend and I had another buyer.” (Ibid.)
3-ply masks
The final order of 1 million 3-ply masks was repurchased from Cross-Defendants by Alanic, and Alanic refunded Baraness’s deposit payment on that order. (Szkopek Decl., Ex. 4, p. 83 [78].) Baraness testified, “after [the 3-ply mask order] was delivered, nothing was moved, nothing was sold, and then Tony approached me with an offer to buy all the 3-plys back, that they had a buyer, and I agreed to that, so they just bought it back, and we scraped the whole thing.” (Wilson Decl., Ex. A, p. 19 [9].)
Alanic repurchased the 3-ply masks from Cross-Defendants on May 7, 2020, and picked them up from Cross-Defendant’s warehouse. (Szkopek Decl., Ex. 6, p. 276 [123, 143].) Johnny Beig testified that Cross-Defendants do not owe Alanic any money from the 3-ply order. (Szkopek Decl., Ex. 4, p. 79 [76].) Alanic did not demand that Cross-Defendants pay for any storage related to the 3-ply masks, “because the order was done in a friendly manner.” (Szkopek Decl., Ex. 4, p. 84.)
Alanic has asserted nine causes of action against Cross-Defendants: (1) Breach of Contract; (2) Violations of the Cal. UCC; (3) Open Book Account; (4) Account Stated; (5) Quantum Meruit; (6) Promissory Estoppel; (7) Fraudulent Inducement; (8) Intentional Concealment; and (9) Violation of UCL (Bus. & Prof. Code § 17200, et seq.).
Contract Termination
“An executory contract may be rescinded, abandoned, or terminated, either wholly or in part, by the mutual consent of the respective parties at any stage of their performance.” (Sanborn v. Ballanfonte (1929) 98 Cal.App. 482, 487–488.) “To ‘terminate’ a contract . . . means to abrogate so much of it as remains unperformed, thereby doing away with the existing agreement upon the terms and with the consequences agreed upon.” (Grant v. Aerodraulics Co. (1949) 91 Cal.App.2d 68, 75.) “ ‘Termination’ occurs when either party pursuant to a power created by agreement or law puts an end to the contract otherwise than for its breach. On ‘termination’ all obligations which are still executory on both sides are discharged but any right based on prior breach or performance survives. (Com. Code § 2106, subd. (3).)
“There can be no question that a contract can be mutually abandoned by the parties at any stage of their performance and each of the parties released from any further obligation on account thereof; that it may be done by parol, and the fact of its having been done established by evidence of the acts and declaration of the parties.” (Evans v. Rancho Royale Hotel Co. (1952) 114 Cal.App.2d 503, 508.) “Abandonment of a contract is a matter of intent and is to be ascertained from the facts and circumstances surrounding the transactions out of which the abandonment is claimed to have resulted. It may be implied from the acts of the parties.” (Busch v. Globe Industries (1962) 200 Cal.App.2d 315, 320.) “[T]he terminology used [by the parties] is not controlling; the intent of the parties should be ascertained from the language used and the facts and circumstances surrounding the transaction. . . . Whether the contract has been canceled, rescinded, or abandoned is a mixed question of law and fact for the trial court.” (Cal. Jur. 3d Contracts § 286.)
As an initial matter, the TACC alleges a single contract for the sale of 1.7 million masks, but the evidence shows that there were actually 4 separate agreements. This issue with the pleadings is alone sufficient to warrant summary adjudication on the contract claims: “When a cause of action is based upon one contract, and the proof establishes an entirely different contract, the case is one of failure of proof…” (Johnson v. De Waard (1931) 113 Cal.App. 417, 422; see Code Civ. Proc. § 471.) Alanic does not address this issue at all.
The undisputed evidence shows that the parties formed four contracts for the sale of masks, accepted by Cross-Defendants through their payment of the initial deposits. (Szkopek Decl., Ex. 4, pp. 49-50 [70].) Cross-Defendants have met their burden to show that the parties terminated their agreements for the sale of the KN95 masks beyond those covered by Cross-Defendants’ initial deposit. Alanic’s cancellation of 300,000 of the KN95 masks ordered is confirmed by the testimony of both of its principals and in Tony Beig’s text messages to Baraness. (Szkopek Decl., Ex. 4, p. 254; Ex. 6, p. 314 [127].) Tony Beig testified that they “got [Baraness] off the hook for the balance,” and that “[i]t was 400[,000] [KN95 masks] because of the deposits [Baraness] paid.” (Wilson Decl., Ex. B, p. 70, 327 [33, 51].) “[Baraness] made a deposit on all three invoices, and we calculated and gave him what he paid…” (Szkopek Decl., Ex. 6, p. 313-14 [126].) Likewise, Alanic’s repurchase and retrieval of the 3-ply masks evidences the parties’ intent to terminate the remainder of that order. (Szkopek Decl., Ex. 6, p. 276 [123, 143].) Alanic’s PMQ testified that Cross-Defendants do not owe Alanic any money related to the 3-ply masks. (Szkopek Decl., Ex. 4, p. 79 [76].)
Alanic has presented no evidence disputing that the parties’ intent was to terminate the remainder of the mask sales. Alanic’s Opposition fails to address the issue of termination at all, and concedes that Alanic cancelled part of the KN95 invoice and repurchased the 3-ply masks from Cross-Defendants. (Opposition, p. 8.) The termination of the sales contracts discharged Cross-Defendants’ remaining obligations, and so precludes Alanic’s claim for breach. This issue is also dispositive of Alanic’s second cause of action for violation of the California Uniform Commercial Code, which is likewise premised on Cross-Defendants’ alleged breach of the sales contract. (TACC ¶ 54.)
Alanic’s causes of action for Open Book Account, Account Stated, and Quantum Meruit are each based on allegations that Cross-Defendants are indebted to Alanic for the purchase of goods and services. (TACC ¶¶ 61-76.) Again, the undisputed evidence shows that Alanic delivered only the KN95 masks covered by Cross-Defendants’ initial deposit (“we calculated and gave him what he paid…” (Szkopek Decl., Ex. 6, p. 313-14 [126])), repurchased the 3-ply masks, and cancelled the remainder of the sales contracts. Accordingly, summary adjudication is also warranted on these claims.
Promissory Estoppel
“The elements of promissory estoppel are (1) a promise, (2) the promisor should reasonably expect the promise to induce action or forbearance on the part of the promisee or a third person, (3) the promise induces action or forbearance by the promisee or a third person (which we refer to as detrimental reliance), and (4) injustice can be avoided only by enforcement of the promise.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 803.) “
“A cause of action for promissory estoppel is a claim in equity that substitutes reliance on a promise for consideration ‘in the usual sense of something bargained for and given in exchange.’ [Citation.] If actual consideration was given by the promisee, promissory estoppel does not apply.” (Fleet v. Bank of America N.A. (2014) 229 Cal.App.4th 1403, 1412–1413.) “The purpose of this doctrine is to make a promise binding, under certain circumstances, without consideration in the usual sense of something bargained for and given in exchange. If the promisee's performance was requested at the time the promisor made his promise and that performance was bargained for, the doctrine is inapplicable.” (Avidity Partners, LLC v. State of California (2013) 221 Cal.App.4th 1180, 1209.)
Under this cause of action, Alanic alleges that “(1) Cross-Defendants made Alanic a promise clear and unambiguous in its terms that they would pay for goods and/or services provided by Alanic; (2) Alanic reasonably and foreseeably relied on Cross-Defendants’ promises, which injured Alanic; and (3) injustice could be avoided only by enforcing Cross-Defendants’ promises to perform and pay.” (TACC ¶ 78.)
Promissory estoppel does not apply to the facts presented, as Alanic’s performance was bargained-for consideration under the parties’ sales contracts. “[W]here the promisee's reliance was bargained for, the law of consideration applies.” (Youngman v. Nevada Irr. Dist. (1969) 70 Cal.2d 240, 250.) Accordingly, summary adjudication is granted on Alanic’s promissory estoppel cause of action.
Fraudulent Inducement; Intentional Concealment
The elements of fraud are: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud or induce reliance; (4) justifiable reliance; and (5) damages. (See Civil Code §1709.) “ ‘Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud. [Citation.] An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract. [Citations.] In such cases, the plaintiff's claim does not depend upon whether the defendant's promise is ultimately enforceable as a contract.” (Agosta v. Astor (2004) 120 Cal.App.4th 596, 603.)
The required elements for fraudulent concealment are: “(1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact.” (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 606 (Graham.)
Alanic alleges that Baraness “made intentional misrepresentations regarding Cross-Defendants’ ability to pay and undertake a venture of such magnitude,” and that “Sean Baraness stated to Alanic’s principals that he had a robust customer base through his construction business to whom he would sell the masks.” (TACC ¶¶ 82-83.)
Alanic has presented no evidence of any misrepresentation of material fact made by Cross-Defendants in connection with the sales agreements. When asked whether Baraness ever promised to pay in full for the invoices, Johnny Beig testified, “I doubt it. I don’t think so.” (Szkopek Decl., Ex. 4, p. 261.) In support of its fraud claims, Alanic argues that Baraness represented himself as a “sales expert” because he claimed he was the owner of a call center, had shares in a Mexican restaurant, and drove a $400,000 Bentley Convertible. None of these facts relate to the sales contracts, there is no evidence that they were intended to induce or did induce Alanic to enter into the contracts, and there is also no evidence showing that the claims were false. Similarly, Alanic fails to point to any evidence indicating that Baraness concealed a material fact that he had a duty to disclose to Alanic. Summary adjudication is therefore warranted on the fraudulent inducement and concealment causes of action.
Tenth Cause of Action for Violation of Bus. & Prof. Code § 17200 (UCL)
California’s Unfair Competition Law (UCL) prohibits unlawful, unfair, or fraudulent business acts or practices. (Bus. & Prof. Code, § 17200 et seq.) “An ‘unlawful business activity’ includes ‘anything that can properly be called a business practice and that at the same time is forbidden by law.’” (People v. McKale (1979) 25 Cal.3d 626, 632 [quoting Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 113].) “Virtually any law or regulation—federal or state, statutory or common law, can serve as a predicate for a Business and Professions Code section 17200 ‘unlawful’ violation. [Citation.]” (Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 681 [internal quotations omitted].)
Alanic’s UCL claim is based on Cross-Defendants’ alleged breach of contract and fraudulent misrepresentations. (TACC ¶ 117-123.) As discussed above, Alanic has not shown any triable issue of material fact on those issues, and so its UCL claim also fails.
Dept.
30
Calendar
No. 11
Baraness
Investments LLC vs. Alanic International Corporation, et. al., Case No. 20STCV44683
Tentative Ruling
re: Cross-Defendants’ Motion for
Sanctions
Cross-Defendants Baraness
Investments, LLC, and Sean Baraness (collectively, Cross-Defendants) move for
an order imposing sanctions against Cross-Complainant Alanic International
Corporation (Alanic) pursuant to Code of Civil Procedure Section 128.7, for attorney’s
fees and costs incurred by Cross-Defendants in defending against the
Cross-Complaint and in bringing the current motion. The motion is granted.
Code of Civil Procedure Section
128.7 “requires that at least one attorney, or the party if he/she is not
represented by an attorney, sign all pleadings, petitions, notice of motions
and other similar papers. [Citation.] The signature indicates that the
attorney, or party, certifies that: the paper is not being presented for an
improper purpose; the legal contentions are warranted by law or nonfrivolous
argument for extension, modification or reversal of existing law; the
allegations and factual contentions have evidentiary support or are likely to
have such support after a reasonable opportunity to further investigate; and
the denials of factual contentions are warranted by the evidence. [Citation.]
If the court determines, after notice or a reasonable opportunity to respond,
that the attorney or party improperly certified the document, it may impose a proper
sanction.” (Barnes v. Department of Corrections (1999) 74 Cal.App.4th
126, 130.)
Section 128.7 allows a court to
impose sanctions for filing a pleading if the court concludes the pleading was
filed for an improper purpose or was indisputably without merit, either legally
or factually. (Guillemin v. Stein (2002) 104 Cal.App.4th 156, 168 (Guillemin).)
A claim is factually frivolous if it is “not well grounded in fact” and it is
legally frivolous if it is “not warranted by existing law or a good faith argument
for the extension, modification, or reversal of existing law.” (Peake v.
Underwood (2014) 227 Cal.App.4th 428, 441 (Peake).) In either case,
to obtain sanctions, the moving party must show the party’s conduct in
asserting the claim was objectively unreasonable. (Ibid.) A claim is
objectively unreasonable if “any reasonable attorney would agree that [it] is
totally and completely without merit.” (Ibid., citing In re Marriage
of Flaherty (1982) 31 Cal.3d 637, 650; and Guillemin, supra, 104
Cal.App.4th at p. 168.) Finally, in considering what sanctions should be
imposed, if any, “the court shall consider whether a party seeking sanctions
has exercised due diligence.” (Code Civ. Proc., § 128.7, subd. (c).)
There is a strict two-part procedural
requirement that must be met before a motion for section 128.7 sanctions can be
heard or granted. First, the party must serve a notice of motion for sanctions
on the offending party at least 21 days before filing the motion with the
court, which specifically describes the sanctionable conduct. (Code Civ. Proc.
§ 128.7, subd. (c)(1).) Service of the motion on the offending party begins a 21-day
safe harbor period during which the sanctions motion may not be filed with the
court. If the pleading is withdrawn or dismissed, the motion for sanctions may
not be filed with the court. (Levy v. Blum (2001) 92 Cal.App.4th 625, 637.)
Cross-Defendants argue that
sanctions are justified because key allegations in Alanic’s Third Amended
Cross-Complaint (TACC) are unsupported or contradicted by the evidence. While
the parties dispute whether Alanic’s claims are subject to summary judgment,
the standard for sanctions under Section 128.7 differs from the summary
judgment standard: “even if a plaintiff could not
successfully defend against either demurrer or summary judgment, that alone is
insufficient to support the sanction of dismissal.” (Kumar v. Ramsey
(2021) 71 Cal.App.5th 1110, 1121.)
“To avoid sanctions under section 128.7, ‘the
issue is not merely whether the party would prevail on the underlying factual
or legal argument,’ but rather whether any reasonable attorney would agree that
the claim is totally and completely without merit. [Citation.] Hence, the
evidentiary burden to escape sanctions under section 128.7 is light.” (Kumar,
71 Cal.App.5th at 1126.) The plaintiff “must make a sufficient evidentiary
showing to demonstrate that he made a reasonable inquiry into the facts and
entertained a good faith belief in the merits of the claim. [The plaintiff]
need not amass even enough evidence to create a triable issue of fact as would
be required if [the defendant] had brought a motion for summary judgment, or
allege a valid cause of action, as required to overcome a demurrer.” (Ibid.)
“A claim is factually frivolous if it is ‘not well grounded in fact’ and it is
legally frivolous if it is ‘not warranted by existing law or a good faith
argument for the extension, modification, or reversal of existing law.’ ” (Peake
v. Underwood (2014) 227 Cal.App.4th 428, 440.)
The Court finds that Alanic’s claims against
Cross-Defendants for breach of contract are factually frivolous. The TACC
alleges that Cross-Defendants placed an order of 1.7 million masks from Alanic
and breached their duty to pay for 1.3 million of the masks. (TACC ¶¶ 9, 30.) But
Alanic’s own principals, Johnny, and Tony Beig, testified that Cross-Defendants
did not owe Alanic for those 1.3 million masks.
Johnny Beig, Alanic’s
Person Most Qualified, testified at his PMQ deposition on November 21, 2022,
that Alanic cancelled 300,000 KN95 masks from Cross-Defendants’ order of
700,000. (Szkopek Decl., Ex. 4, p. 254 [91].) He further stated that
Cross-Defendants did not owe Alanic any money from the 3-ply mask order, because
Alanic repurchased those masks to resell them to another buyer. (Szkopek Decl.,
Ex. 4, p. 79 [76].) His testimony on this point was not equivocal:
Q Just
to be clear, you're saying that the 3-ply masks are no longer at issue in this
litigation, correct?
A Correct.
[. . .]
Q As
far as Alanic is concerned, does Sean Baraness and his company owe Alanic any
money from any 3-ply deal?
A No.
(Szkopek Decl., Ex. 4, pp. 78-79.)
During Tony Beig’s deposition on
November 28 and December 28, 2022, he confirmed that Alanic repurchased all
3-ply masks from Cross-Defendants. (Szkopek Decl., Ex. 6, p. 276 [122].) Tony
Beig also concurred that Alanic “got [Baraness] off the hook for the balance”
of the KN95 mask orders. (Wilson Decl., Ex. B, p. 70 [33].) Furthermore, while
the TACC alleges that Cross-Defendants owed Alanic for storage costs related to
the 3-ply masks (TACC p. 10), Johnny Beig testified that Alanic did not demand
that Cross-Defendants pay for storage, “because the order was done in a friendly
manner. (Szkopek Decl., Ex. 4, p. 84 [79].)
Despite the
testimony of its owners and PMQ, Alanic has continued to argue that
Cross-Defendants breached its agreement to pay for the KN95 and 3-ply masks. “[E]ven though an action may not be frivolous when it is
filed, it may become so if later-acquired evidence refutes the findings of a
prefiling investigation and the attorney continues to file papers supporting
the client's claims. [Citation.] Thus, a plaintiff's attorney cannot ‘just
cling tenaciously to the investigation he had done at the outset of the
litigation and bury his head in the sand.’ ” (Peake, 227 Cal.App.4th at
441.) The fact that this testimony comes from Alanic’s own principals calls
into question whether Alanic’s claims were factually reasonable even at the
time of filing; in any case, it should have been clear that the claims were not
“well grounded in fact” following the Beig depositions.
Alanic’s fraud claims
appear both factually and legally frivolous. Alanic alleges that Baraness “made
intentional misrepresentations regarding Cross-Defendants’ ability to pay and
undertake a venture of such magnitude,” and that “Sean Baraness stated to
Alanic’s principals that he had a robust customer base through his construction
business to whom he would sell the masks.” (TACC ¶¶ 82-83.) Alanic has
presented no evidence of misrepresentations by Baraness regarding buyers at his
construction business. For Baraness’s “misrepresentations regarding
Cross-Defendants’ ability to pay and undertake a venture of such magnitude,”
Alanic’s evidence is that Baraness represented himself as the owner of a call
center, had shares in a Mexican restaurant, and drove an expensive car. (Wilson
Decl., Ex. C, p. 262-266 [81].) Johnny Beig testified that Baraness made these
claims to him in 2015 or 2016, four years before the parties’ agreements. (Id.
p. 262.) There was no evidence that these claims induced Alanic to enter into
the sales agreement years later, nor any showing that the claims were false. The
argument that fraudulent inducement may be based on Baraness driving a Bentley
convertible is clearly not warranted by existing law or any extension or
modification of it. Any reasonable attorney would agree that these claims are “totally
and completely without merit.” (Peake, 227 Cal.App.4th 428, 440.)
A sanction imposed for violation of Section
128.7 “shall be limited to what is sufficient to deter repetition of this
conduct or comparable conduct by others similarly situated,” and may consist of
“directives of a nonmonetary nature, an order to pay a penalty into court, or,
if imposed on motion and warranted for effective deterrence, an order directing
payment to the movant of some or all of the reasonable attorney’s fees and
other expenses incurred as a direct result of the violation.” (Code Civ. Proc.
§ 128.7, subd. (d).) Cross-Defendants request monetary sanctions for attorney’s
fees and costs incurred by Cross-Defendants in defending against the
Cross-Complaint and in bringing the current motion. The requested sanctions are
granted.